Government Advertising Agency Petition

Meeting report

Presentation on Government Advertising Agency Petition

Mr Zenani Sibanyoni said that he brings forth the petition in terms of Section 17 of the Constitution with Section 69 (d). He said that “this clearly shows that our government is a caring government, a government which follows the constitution.”

Mr Sibanyoni said that he thinks that the petition he has brought forward complies with the guidelines of the Committee because he had tried to exhaust all the available avenues before coming to the Committee. The Draft State and State Corporation Advertising Agency Bill is designed to help government with its fiscus. It is designed to make sure all available advertising platforms are utilised by government. For example, government has roughly two million civil servants. There are other advertising platforms that could be utilised by government as mentioned in the Bill, such as the Department of Home Affairs (DHA); police stations, with a notable 1138 stations around the country; government vehicles used for service delivery; government websites and municipal buildings.

Mr Sibanyoni made an example that the income generated by the advertisements could be used to feed the three million children that go to school on empty stomachs. He added that because the country practices a mixed economy, there is nothing unbecoming if that kind of agency is formulated by the government.

He indicated that the Draft State and State Corporations Advertising Agency Bill will pass the Constitutional master because there is no provision in the said Bill that is encroaching upon the constitutional or statutory rights or even common law rights of any natural or juristic person.

Mr Sibanyoni made a request that the Committee vote in favour of the Bill and that if it cannot be done at the time, the Chairperson and members and officials present at the meeting refer the matter to the NCOP for consideration and voting in accordance with the guidelines. If South Africa can legislate this Bill, it has a potential of being exported to other countries as IP. This way Government will not be concentrating on mining and agriculture for national income, but IP has a potential of making sure that government gets the necessary funds. He gave an example using China which has 39 million civil servants. Apply the concept he mentioned before of payslips, China could make R390 million per month. Based on the International Intellectual Property treaties, China would have to pay compensation to the author of the Bill and the author being a South African would have to be duty bound to pay 15% tax to the government. As the author, he is willing to part with 5% or 10% over and above the 15% in line with Corporate Social Responsibility.

There are 196 countries all over the world, so if each country were to embrace this Bill, that would mean more tax for the South African Government.

Discussion

Mr S Mthimunye (ANC, Mpumalanga) said that all Members of Parliament (MP) should perhaps get advice or comments of the relevant departments before they can make a decision.

Mr Sandile Nene, Advisor to the Minister of Communications, Department of Communications (DOC) said that they were interacting with this text for the first time. He questioned its practicality saying that within the Government Communication and Information System (GCIS), they already have a media bulk buying unit which an advertising agency is essentially working for the government. The DOC in working with the advertising industry is confronted with the emergence of the fourth industrial revolution and advertisers going online. The biggest generators of income coming from the top 20 advertisers in the country are not South African companies. As the department responsible for communication and marketing, they are confronted with a number of realities which are saying the businesses must change and embrace technology for their long-term self-sustainability, otherwise they will not be able to generate anything. It also requires policy making and regulatory intervention because if everything is going online and is interrupting businesses, then they need to come back with a mechanism that explains how government can generate income from such online activities.  

Ms Nicolette Prinsloo, Directorate: Distribution Services, GCIS said that she shares the sentiments of her colleague because there already is a media buying agency within the GCIS. She is concerned that establishing another agency of this nature within government would be a duplication. It would require a huge amount of capacity to monitor such an agency as it would be a Chief Directory on its own. She does not see how state funds will be used to pay a government agency, and how this will compare to what private agencies are paying. The government has invested funds within the marketing industry in support of small businesses, and passing this bill will force the state to keep those funds to itself. She wishes to see the research behind the concept. 

Ms Prinsloo asked why government would want to communicate private sector messages when it should be communicating its own government messages to the public. It is true that government has a lot of platforms that it can brand with advertising but asked if any research has been done to establish what impact this will have and what it is that government will be hoping to achieve. Without research, it is very difficult to make a decision whether or not something like this will work. The President did say that he is trying to merge departments into units. Passing this Bill would be creating a department that is already existing in government in the form of GCIS, which would go against what the President is trying to achieve. She believes there is a lot of detail missing from the presentation and there are many concerns which she has around the proposed Bill.

Mr Denzel Matjila, Director: Legal Services, Department of Public Enterprises, said that he had a look at the draft and would like to make a correction that it is not prepared by the NCOP in terms of Section 69 (b) of the interim Constitution of 1993 since there is no interim Constitution any more. He said it should have read “Section 69 (b) of the Constitution.”  Establishing a State-Owned Entity (SOE) in the current state is not as easy as it looks. They do not want to have another failing SOE. A proper business case should be made to establish the viability of the concept. The proposal said that if the entity were to be established, the Executive Authority should be the Minister of Public Enterprises, but the current matter is being driven by the NCOP in terms of Section 68 and 69. Should a matter which involves a national Minister and a national public enterprise, be driven by the NCOP or should it be driven by the National Assembly (NA). He also said that the Minister would have to get approval from Cabinet in order to take on something like this.

Ms Orcilla Ruthman, Chief Director, Department of Public Enterprises, said that the way the petition was presented is an innovation for government printing and government advertising. As the Department of Public Enterprises (DPE), they appreciate that National Treasury (NT) and the Department of Trade and Industry (DTI) were consulted prior to the Bill being brought before the current Committee. When the DPE first interacted with the draft, they did research on it to find out if there are any other SOEs that already perform the same function as covered by the Bill. They found that GCIS and ‘Government printing works’ have such a function, and this would then create a duplicate and overlap. They would have to comply with procurement and NT rules to make this initiative constitutionally possible. Government is looking into reforming all state-owned companies, and the Presidential State-Owned Company Council will be tasked with establishing whether such an entity would be a stand-alone entity or be merged with an existing SOE of a similar nature. There is merit in the bill, but it just needs to be carefully examined before being adopted. Home Affairs and Universities will have to be consulted regarding the Bill.

The Chairperson welcomed in Mr J Mthethwa (ANC, Kwazulu Natal) who joined the meeting late.

Mr Klaas Mokaba, Deputy Director of Consumer Law and Policy, DTI said that the DTI supports idea of having a generator of revenue coming from advertising that comes from third parties and happens on government platforms. There are a couple of concerns that they have noted regarding the mentioned Bill. They have identified that there has been no socio-economic impact assessment that has been conducted on the Bill. The benefits of the Bill should be highlighted. He asked which advertising legal framework the idea was based on and what informs its advertising basis. He wants clarity on whether it is a member of the public that initiated the Bill, or has it been initiated by the NCOP. The Consumer Protection Act requires marketing to be carried out in a manner that doesn’t contradict with other legislation that are to be complied with when advertising or marketing goods and services. They will be in a better position to look at the Bill as soon as all required drafting standards have been complied with. The DTI supports the idea of the Bill.

The Chairperson clarified that the NCOP did not initiate the Bill. The Bill is brought before the Committee as a petition by a member of the public. It has been referred to the Committee by the NCOP.

Mr Sibanyoni said the petition is in terms of Section 69 (d), not Section 69 (b). He made an error when he said this was based on Act 200 of 1993. It is actually a petition in terms of Section 69 (d) of the Constitution, Act 108 of 1996.

Dr Mimmy Gondwe, Content Advisor, Parliament clarified that the Bill has nothing to do with the NCOP as of yet but was referred to them as a Committee for consideration by the Chairperson of the NCOP.

Mr Sibanyoni said that he did not consult the DOC because he was under the impression that the only departments that he was required to approach were DTI and NT. He apologised to DOC. GCIS deals with buying bulk media and not with selling advertising on state owned platforms.

Mr Mthimunye said their understanding is that they are serving a developmental state which intervenes in a problematic economy. Our socio-economic conditions are influenced by racial divide. It is for this reason that they should embrace the bill brought before them. The law-making mandate in South Africa rests with Parliament and it is on this basis that he appreciates the fact that Mr Sibanyoni decided to bring this matter before them. A compelling business case needs to be put in place in this instance. The fifth Parliament is being dissolved in a month’s time but after elections a new Committee will look into the Bill. Everything that has transpired will be kept on record. DTI’s mandate is to assist in transforming the economy. It is their responsibility as a developing state to regulate the space and to transform it and would like for this submission to be seen in that manner so as to encourage other people like Mr Sibanyoni to come forth with other brilliant ideas like this one. Mr Mthimunye affectionately said that “we need a country of independent innovators.” He asked the Committee to rather try and figure out how they would assist Mr Sibanyoni in developing his idea.

Dr H Mateme (ANC, Limpopo) said that the first point of call by Mr Sibanyoni should have been the DOC. This activity is already happening at the DOC but not to the extent Mr Sibanyoni would like for it to happen, and this perhaps brings forth an opportunity to incubate the idea. DPE and DOC should work together to encourage incubation. When the idea is being implemented, the parties involved will make sure that no duplication will occur. Consumers are bombarded by the advertising industry. They need to protect the consumer and not leave their people behind. Government should sit and decide on how to incubate local talent to make sure all concerns raised can be cleared. Even though Parliament is being dissolved, the sixth Parliament will find this discussion on the house records.

Ms Ruthnam said that the Bill is worth looking into but requested that they be allowed to consult other relevant stakeholders before making a decision regarding the Bill.

Mr Nene said they are willing to meet and talk with Mr Sibanyoni in order to draft a proposal. They have just appointed a marketing and advertising council and would like to talk to Mr Sibanyoni to make him understand their processes. They also need to consult other relevant stakeholders. They work with the advertising regulatory board together with the DTI to deal with transformation.

Mr Mokaba said they would assist in strengthening the Bill in terms of making sure that it complies with all relevant Acts of legislation. He said that they are happy with the clarification that this was a petition brought before the Committee by a member of the public.

Ms Tasneem Starris, Researcher, Parliament said there a number of procedural and substantive aspects that are missing from the bill and recommends that the Committee should consult Parliaments legislative drafting unit to make the Bill compliant with all procedural and substantive aspects.

Mr J Mthethwa (ANC, KwaZulu Natal) thanked everyone present, especially the departments and Mr Sibanyoni for taking initiative. Even though the Bill has loop holes, the departments will assist in fixing the Bill in to a workable Bill in accordance with the laws of the country.

The meeting was adjourned.